Bitcoin

What does anyone know about this form of computer currency? It seems to be out there enough to be something, but I'm not sure what. What is the point? We have a local merchant offering to trade in bitcoin, which I guess is more for the publicity at this point. Moment to moment it fluxuates in value but the trend is to lower values. Why is this a good or useful thing?

Re: Bitcoin

How so? Yesterday a bitcoin was in the $845+USD range. Now it is about $820 USD and falling. Tomorrow it could be down by more or up. It seems you are not cutting the middleman, but more playing the consumer market, buying in low and hoping to spend it high.

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With the USD less than $800 and trending down. Assuming there is value in such a currency, who determines what that value is. Was $8 or 9 hundred an arbitrary wishful thinking value? Without the concrete standard of something to compare it to, like gold, we are left to find the value of consumer confidence. Who set this at any price? Based on what?

I expect a $5.00 bitcoin by the end of May, 2014. Then we'll have something to invest in.

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Watson wrote:With the USD less than $800 and trending down. Assuming there is value in such a currency, who determines what that value is. Was $8 or 9 hundred an arbitrary wishful thinking value? Without the concrete standard of something to compare it to, like gold, we are left to find the value of consumer confidence. Who set this at any price? Based on what?

I expect a $5.00 bitcoin by the end of May, 2014. Then we'll have something to invest in.

It is primarily not designed as an investment vehicle. The primary idea is to use it as an alternative currency. If, and that is a big if, bitcoins become mainstream it is possible it even becomes more stable than regular currency. I think the volatility is due because of the uncertainty about the future of bitcoins in a negative but also in a positive sense.

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It's still very much a watch and see but more and more big companies are now embracing it as a legitimate form of payment and a safe trading currency. I suspect we're just seeing the tip of a monstrous iceberg and I'm curious to see how the major banks will respond. My guess is that leaning on governments to impose regulatory constraints will be their first line of attack but naturally they won't allow such regulatory constraints for themselves. They are self-regulating and thus beyond reproach.

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It seems to be established only in countries that have computers and internet. But it does have a uniform presence based on the USD (now at $793) , in Canada, Britain and Europe. And other counties, but these are the ones I'm following at the moment.

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Watson wrote:Assuming there is value in such a currency, who determines what that value is. Was $8 or 9 hundred an arbitrary wishful thinking value? Without the concrete standard of something to compare it to, like gold, we are left to find the value of consumer confidence. Who set this at any price? Based on what?

For examples, I'd check out BitcoinCharts.com. The "Bid" and "Ask" columns show the values that people are currently willing to buy and sell at, respectively. A bitcoin's value on that market is somewhere in-between.

Right now it looks like Mt. Gox has people buying Bitcoins for 919.01002 USD each and selling them at 919.9 USD each, so they're worth somewhere between $919 and $920.

You can click on Mt. Gox's USD entry to get to this page showing the bid vs. ask distributions in the Market Depth charts toward at the bottom. Note that bid and ask distributions can't overlap, because if they ever did, transactions would occur until they ceased to overlap.

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If you want to get one - maybe go to http://www.coinbase.com -- I think their utility will be expanding but one of the initial goals of bitcoins was to create a system the you can exchange currencies cheaply.

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Does this kind of currency, when used in a transaction, get around sales taxes? Interesting that something called a "coin" is worth $800. My only numismatic thought is that the U.S. penny has become ridiculous (paper dollar bills, too). Actually costs over a penny to mint one now. A nuisance coin - just round up or down on prices.

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Very cynical Venus, but from what I've learned so far that is not likely going to be the case, being the same as the others, that is.

And the merchant would ring up your total, including taxes and you pay that amount. How you pay makes little difference how the tax is handled. At the end of the day the merchant just adds up the cash on hand, credit receipts and bitcoin and deposits each accordingly.

Hotels and stores often post an exchange rate if their cliental is likely to carry foreign currency. They could possibly post a bitcoin daily rate of exchange.

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Watson wrote:Very cynical Venus, but from what I've learned so far that is not likely going to be the case, being the same as the others, that is.

Not cynical, realistic.

This is more or less what I expect is going to happen when it gains more momentum:

1. Bankers start to lobby politicians.2. Politicians suddenly become 'shocked' that bitcoins are used for drug transactions.3. The press starts to print worrying articles.4. Suddenly the DHS 'discovers' that bitcoins are used by terrorists.5. President gets involved, the press, the TV, 'something' must be done!6. Another 'patriot' bill is passed to regulate and integrate bitcoins in the banking world.7. Goldman Sachs and cohorts buyout the major players using free Bernanke money.8. A couple of people are rich now and show off their money, 'wow bitcoins are great'!9. Case closed, the bankers own this thing now and can basically do whatever they want with it.

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Yes it was down by more but has come up a bit. Definitely sounds like a risky place to hold your money. Especially if the banker is not responsible for the loses.

So someone steals all these bitcoins, exposing a vulnerability in the system. People lose confidence in the currency and the value drops. Now no body wants them, making the stolen money hard to exchange for real money. So they stole something of value and in doing so, they rendered their prize near worthless.

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No I have no opinion or conclusion about original intent, or ultimate best uses. I am just following it with a casual interest. I gather it was not intended as an alternate form of money, but as an alternate to credit cards.I'm not watching it for speculative value. I'm watching to see if there is a stable value. As a form of money to buy goods and services, it looks risky. Imagine going to your bitbank and getting a $600 coin out, and the next day you go shopping and fine your bitcoin is worth $500?

It may not have been design for speculation, but at this point that is the only value it does seem to have.

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Watson wrote:I gather it was not intended as an alternate form of money, but as an alternate to credit cards.........It may not have been design for speculation, but at this point that is the only value it does seem to have.

Sorry, but I think you still do not understand what bitcoins are and how they are currently used.

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The advantages are to get money to someone immediately, over long distance with low or no fees, instead of say Western Union. Or to use it instead of credit card and avoiding those Heavy fees.Most of us would not be buying into bitcoins, now at $513, knowing they were worth $620 just a day or two ago.

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Watson wrote:So why don't you enlighten us, on the Bitcoin, according to Venus.

I already told you many posts ago what it was, apparently that zapped right over your head.

It is ironic, you opened a posting asking what it was, you got an answer but you did not do anything with it and then first you criticize the speculative aspects and later on you did not talk about anything else than the speculative aspects as if that was the whole points of bitcoins.

And no for the second time, it is not like a credit card, and yes people use it and no it is not primarily designed for speculation purposes.

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If you had gone to the local bitbank yesterday and got a coin for $513, you would be pleased no doubt to see it is now $570 in your e-wallet. Just a cool almost 10% appreciation in just 24 hours. Could easily go the other way in equally dramatic fashion.